Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Green Mountain Coffee Goes to School

If you're struggling to figure out what to get your college student for Christmas, Green Mountain Coffee Roasters (UNKNOWN: GMCR.DL  ) has an idea. Weary holiday consumers, meet Green Mountain's college-branded Keurig K10 MINI Plus brewers.

Green Mountain Coffee Roasters, Inc., Starbucks

Image source: Green Mountain Coffee Roasters, 

Just like they sound, the $99 MINI Plus brewers offer the company's slimmest physical profile, ideal for those looking for a quick single-serve brewer to occupy minimal space -- say, for instance, folks living in a dorm room, apartment, or maybe a tailgating van... down by the river.

Already own a Keurig MINI Plus? No problem; you can also just buy the decals from Green Mountain and adorn it yourself.

But don't get too excited just yet; they're only available for 10 NCAA Division 1 schools at the moment, including the Universities of Arizona, Arkansas, Florida, Georgia, Miami, Mississippi, Nebraska, and Texas; Rutgers University, and Washington State. Even so, those 10 schools collectively account for more than 300,000 enrolled students, as well as millions upon millions of fans and alumni.

And if your favorite school isn't available just yet, Green Mountain's website insists you "stay calm and keep checking back -- we're launching new schools all the time."

Here's what it means for you
Now, that's all well and good... but what does it mean for investors?

Remember, despite turning in blowout quarterly results a few weeks ago, Green Mountain issued surprisingly weak guidance for the current quarter -- its fiscal first quarter 2014, mind you -- calling for overall sales growth in the low-to-mid single digits thanks to "difficult brewer and portion pack sales comparisons," the negative impact of unlicensed K-Cup packs, and currency exchange effects in Canada.

Meanwhile, retail coffee powerhouse Starbucks (NASDAQ: SBUX  )  last quarter not only managed to grow its own quarterly revenue by 13% on solid 7% global comparable-store sales growth, but is also targeting 10% or greater revenue growth next year on solid expected comps, and more than 1,500 new planned physical locations. Needless to say, investors are rightly worried of the broader implications if Green Mountain can no longer keep up with the significantly larger Starbucks' top-line growth.

That said, Green Mountain did state that its quarterly adjusted earnings should grow more quickly, or in the 12% to 18% range over last year, and stronger high-single-digit revenue growth should resume during the second half of fiscal 2014 as some of those unlicensed packs are transitioned to licensed partners.

But in the near term, you can bet that Green Mountain is keen to grab all the system sales it can muster in its efforts to exceed expectations during the all-important holiday season. If that means pulling in tens of thousands of Division 1 college fans by offering branded decals on their single-serve brewers, then so be it.

Given Green Mountain's currently sluggish growth, however, I'm not particularly intrigued with shares currently trading around 23 times last year's earnings, and almost 17 times next year's estimates. But it's also worth noting Green Mountain did declare a quarterly dividend of $0.25 per share last month while simultaneously approving up to $1 billion in share repurchases over the next two years, so the stock could very well turn out to be a good deal for patient long-term investors.

Personally, though, I'm fine with simply keeping Green Mountain on my watchlist for the time being. If I'm afforded a more attractive entry point down the road, I'll be happy to take advantage of it.

One of Green Mountain's important partners is one of these six solid growth picks
They said it couldn't be done. But David Gardner has proved them wrong, time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market, and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2761550, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:27:15 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **
SBUX $54.14 Up +0.69 +1.29%
Starbucks CAPS Rating: ****